News | May 1, 2009

Breaking the Yardstick: The Dangers of Market-based Governance

By Don J. DeYoung Defense Horizons 67

The Dangers of Market-based GovernanceOverview

In the middle of the last century, America became a superpower. It happened, in part, because of a well-balanced technological partnership between the Federal Government and commercial sector. After winning a world war against fascism, this public-private alliance went on to cure infectious diseases, create instant global communications, land humans on the Moon, and prevail in a long Cold War against communism. This, and more, was accomplished without bankrupting the Nation’s economy. The partnership’s record of service to the American people and the world has been remarkable.

A key element of this partnership has been Department of Defense laboratories. They helped make the U.S. military the most formidable fighting force in the world. Among their many achievements, the labs developed and fielded the first modern radar in time for duty in World War II; invented the first intelligence satellite, indispensable during the Cold War; pioneered the original concepts and satellite prototypes of the Global Positioning System, vital for all post–Cold War conflicts; created fundamental “stealth” principles and night vision devices, a lethal combination in the first Gulf War; and produced the thermobaric bomb, which spared U.S. troops the bloody prospect of tunnel-to-tunnel combat in the mountains of Afghanistan.

In recent years, however, the private sector has been increasingly tasked to carry out the labs’ functions on the belief that “through the implementation of free market forces, more efficient and effective use of resources can be obtained,” which the Defense Science Board asserted in 1996.1 As this development has progressed, there is a growing body of evidence that, rather than faster, better, and cheaper, the new approach is actually slower, less effective, and costlier. This is, in part, because the government’s own scientific and engineering competence, a hallmark of the great successes in the past, is destroyed or bypassed as a result of the private sector’s ascendant role.

This paper, a sequel to The Silence of the Labs,2 examines how the loss of in-house scientific and engineering expertise impairs good governance, poses risks to national security, and sustains what President Dwight Eisenhower called “a disastrous rise of misplaced power.”3